TOOL KIT

Continued improvement in stores and double-digit growth in digital
business combine for strong profit and sales performance

Company raises earnings and sales guidance for fiscal 2018

CINCINNATI--(BUSINESS WIRE)--May 16, 2018--
Macy’s, Inc. (NYSE:M) today reported first quarter 2018 earnings per
diluted share of $0.45, or $0.48 excluding impairment and other costs.
This compares to $0.26 per share in the first quarter of 2017 for both
reported and adjusted diluted earnings per share. Also excluding asset
sale gains, earnings per diluted share attributable to Macy’s, Inc. were
$0.42 in the first quarter of 2018. This compares to $0.12 per share in
the first quarter of 2017.

The company also reported comparable sales on an owned basis that were
up 3.9 percent in the first quarter of 2018 compared to the first
quarter of 2017. On an owned plus licensed basis, comparable sales were
up 4.2 percent for the first quarter of 2018.

“Macy’s, Inc.'s results for the first quarter of 2018 reflect continuing
momentum in the business. We exceeded our expectations and saw strong
performance across all three brands—Macy’s, Bloomingdale’s, and
Bluemercury—as well as across all geographic regions and families of
business. We are maintaining a healthy inventory position, which helped
us deliver improved gross margin,” said Jeff Gennette, Macy’s, Inc.
chairman and chief executive officer. “The winning formula for Macy’s,
Inc. is a healthy brick & mortar business, robust e-commerce and a great
mobile experience. While we have more work to do, the continuing
improvement in our stores is encouraging and we once again achieved
double-digit growth in the digital business. Our best customer is
responding well to the improvements we’ve made to her experience in our
stores, on .com and through the Macy’s app.”

“Our first quarter performance reflects solid execution of our North
Star Strategy, including merchandising and marketing activities. We also
saw continued healthy consumer spending and significant improvements in
international tourism. Taken together, these positive factors give us
confidence to raise both our sales and earnings guidance for the fiscal
year,” continued Gennette. “Heading into the second quarter, we are
intensely focused on laying the foundation for our 2018 strategic
initiatives to support improved performance in the back half of the
year.”

Sales

Net sales in the first quarter of 2018 totaled $5.541 billion, an
increase of 3.6 percent, compared with sales of $5.350 billion in the
first quarter of 2017. Comparable sales on an owned basis were up 3.9
percent in the first quarter and up 4.2 percent on an owned plus
licensed basis.

The company estimates that comparable sales in the first quarter of 2018
benefited approximately 250 basis points from the shift of Friends and
Family from the second quarter to the first. Excluding this, the company
estimates that comparable sales were up 1.7 percent on an owned plus
licensed basis.

Operating Income and Net Income

Macy’s, Inc.’s operating income for the first quarter of 2018 totaled
$238 million, or 4.3 percent of sales, compared to $219 million, or 4.1
percent of sales, for the first quarter of 2017. Operating income for
the first quarter of 2018 totaled $257 million, or 4.6 percent of sales,
excluding impairment and other costs of $19 million, which primarily
relate to the wind-down of Macy's China Limited as discussed below. The
company anticipates recognizing additional charges of approximately $10
million related to the wind-down over the course of fiscal 2018. There
were no impairment and other costs in the first quarter of 2017.

Net income attributable to Macy's, Inc. shareholders for the first
quarter of 2018 totaled $139 million, or 2.5 percent of sales, compared
to $78 million, or 1.5 percent of sales, for the first quarter of 2017.
Net income for the first quarter of 2018 totaled $149 million, or 2.7
percent of sales, excluding impairment and other costs. This compares to
$80 million, or 1.5 percent of sales, in the first quarter of 2017,
excluding premiums on the early retirement of debt. Also excluding asset
sale gains, net income for the first quarter of 2018 totaled $131
million, or 2.4 percent of sales, compared to $38 million, or 0.7
percent of sales, in the first quarter of 2017.

Cash Flow

Net cash provided by operating activities was $322 million in the first
quarter of 2018, compared to $237 million in the first quarter last
year. Net cash used by investing activities in the first quarter of 2018
was $156 million, compared with $60 million a year ago. Net cash used by
financing activities in the first quarter of 2018 was $99 million,
compared with $273 million last year.

China Update

Macy’s, Inc. has set a new approach to its business in China. The
company has come to a mutual agreement to end the joint venture with
Fung Retailing Limited. Macy’s will remain active on Alibaba’s
e-commerce platform TMall, as well as social media channels. The Macy’s
e-commerce team in San Francisco will manage the ongoing China business
with operational support from Fung Omni in Shanghai.

Looking Ahead - Raising Earnings and Sales Guidance

Macy's, Inc. is updating its guidance for fiscal 2018. The company now
expects adjusted earnings per diluted share of $3.75 to $3.95 in fiscal
2018, excluding anticipated settlement charges related to the company’s
defined benefit plans as well as impairment and other costs. This
reflects an increase of 20 cents compared to the prior guidance. Total
sales are expected to range from a 1 percent decline to a .5 percent
increase in fiscal 2018. Comparable sales on an owned plus licensed
basis are expected to increase between 1 and 2 percent. Comparable sales
on an owned basis are expected to be 20-30 basis points below comparable
sales on an owned plus licensed basis.

Total sales guidance is provided on a 52-week basis in 2018 compared to
a 53-week basis in 2017. Comparable sales guidance is provided on a
52-week basis in both 2018 and 2017.

First quarter 2018 results, first quarter 2017 results and guidance for
fiscal 2018 reflect the new accounting standards related to revenue
recognition and retirement benefits. Macy's, Inc. has recast its
quarterly income statements and balance sheets for 2016 and 2017 to
reflect adoption of these new standards. These documents can be found on
the investor relations page at www.macysinc.com.

Important Information Regarding Financial Measures

Please see the final pages of this news release for important
information regarding the calculation of the company’s non-GAAP
financial measures.

Macy’s, Inc. is one of the nation’s premier retailers. With fiscal 2017
sales of $24.837 billion and approximately 130,000 employees, the
company operates approximately 690 department stores under the
nameplates Macy’s and Bloomingdale’s, and more than 160 specialty stores
that include Bloomingdale’s The Outlet, Bluemercury, Macy’s Backstage
and STORY. Macy’s, Inc. operates stores in 44 states, the District of
Columbia, Guam and Puerto Rico, as well as macys.com,
bloomingdales.com
and bluemercury.com.
Bloomingdale’s stores in Dubai and Kuwait are operated by Al Tayer Group
LLC under license agreements. Macy’s, Inc. has corporate offices in
Cincinnati, Ohio, and New York, New York.

All statements in this press release that are not statements of
historical fact are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are
based upon the current beliefs and expectations of Macy’s management and
are subject to significant risks and uncertainties. Actual results could
differ materially from those expressed in or implied by the
forward-looking statements contained in this release because of a
variety of factors, including conditions to, or changes in the timing
of, proposed real estate and other transactions, prevailing interest
rates and non-recurring charges, the effect of federal tax reform, store
closings, competitive pressures from specialty stores, general
merchandise stores, off-price and discount stores, manufacturers’
outlets, the Internet, mail-order catalogs and television shopping and
general consumer spending levels, including the impact of the
availability and level of consumer debt, the effect of weather and other
factors identified in documents filed by the company with the Securities
and Exchange Commission. Macy’s disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required by law.

NOTE: Additional information on Macy’s, Inc., including past news
releases, is available at www.macysinc.com/pressroom.
A webcast of Macy's, Inc.’s call with analysts and investors will be
held today (May 16) at 9:30 a.m. ET. The webcast is accessible to the
media and general public via the company's website at www.macysinc.com.
Analysts and investors may call in on 1-800-239-9838, passcode 7668372.
A replay of the conference call can be accessed on the website or by
calling 1-888-203-1112 (same passcode), about two hours after the
conclusion of the call.

MACY’S, INC.

Consolidated Statements of Income
(Unaudited) (Note 1)

(All amounts in millions except percentages and per share figures)

13 weeks ended

13 weeks ended

May 5, 2018

April 29, 2017

% to

% to

$

Net sales

$

Net sales

Net sales

$

5,541

$

5,350

Credit card revenues, net

157

2.8

%

161

3.0

%

Cost of sales

(3,382

)

(61.0

%)

(3,303

)

(61.7

%)

Selling, general and administrative expenses

(2,083

)

(37.6

%)

(2,057

)

(38.5

%)

Gains on sale of real estate

24

0.4

%

68

1.3

%

Impairment and other costs (Note 2)

(19

)

(0.3

%)

—

—

%

Operating income

238

4.3

%

219

4.1

%

Benefit plan income, net

11

13

Interest expense, net

(66

)

(84

)

Premiums on early retirement of debt (Note 3)

—

(3

)

Income before income taxes

183

145

Federal, state and local income tax expense (Note 4)

(52

)

(68

)

Net income

131

77

Net loss attributable to noncontrolling interest

8

1

Net income attributable to Macy's, Inc. shareholders

$

139

$

78

Basic earnings per share attributable to

Macy's, Inc. shareholders

$

.45

$

.26

Diluted earnings per share attributable to

Macy's, Inc. shareholders

$

.45

$

.26

Average common shares:

Basic

306.6

305.0

Diluted

309.4

306.9

End of period common shares outstanding

306.4

304.5

Depreciation and amortization expense

$

235

$

243

MACY’S, INC.

Consolidated Statements of Income (Unaudited)

Notes:

(1)

The 13 weeks ended April 29, 2017 have been recast to reflect the
company's retrospective adoption of Accounting Standards Update No.
2014-09 (ASU 2014-09), Revenue from Contracts with Customers, on
February 4, 2018. Further, because of the seasonal nature of the
retail business, the results of operations for the 13 weeks ended
May 5, 2018 and April 29, 2017 (which do not include the Christmas
season) are not necessarily indicative of such results for the
fiscal year.

(2)

For the 13 weeks ended May 5, 2018, impairment and other costs
associated with the wind-down of Macy's China Limited amounted to
$19 million on a pre-tax basis. The after tax effect of these
charges during the 13 weeks ended May 5, 2018 was $10 million after
tax or $.03 per diluted share attributable to Macy’s, Inc.

(3)

The 13 weeks ended April 29, 2017 included $3 million, on a pre-tax
basis, of premium expenses and fees associated with the early
retirement of debt. The after tax impact during the 13 weeks ended
April 29, 2017 was $2 million.

(4)

For the 13 weeks ended May 5, 2018, federal, state and local income
taxes differed from the company's federal income tax statutory rate
of 21% because of the effects of state and local taxes, including
the settlement of various tax issues and tax examinations. Further,
the 13 weeks ended May 5, 2018 and April 29, 2017 included the
recognition of approximately $3 million and $11 million,
respectively, of net tax deficiencies associated with share-based
payment awards. These items as well as the enactment of U.S. federal
tax reform in December 2017 resulted in an effective tax rate for
the 13 weeks ended May 5, 2018 of 28.4% as compared to 46.9% for the
13 weeks ended April 29, 2017.

MACY’S, INC.

Consolidated Balance Sheets (Unaudited)

(millions)

May 5,

February 3,

April 29,

2018

2018

2017

ASSETS:

Current Assets:

Cash and cash equivalents

$

1,531

$

1,455

$

1,201

Receivables

250

363

345

Merchandise inventories

5,291

5,178

5,626

Prepaid expenses and other current assets

638

650

634

Total Current Assets

7,710

7,646

7,806

Property and Equipment – net

6,575

6,672

6,886

Goodwill

3,908

3,897

3,897

Other Intangible Assets – net

486

488

496

Other Assets

889

880

793

Total Assets

$

19,568

$

19,583

$

19,878

LIABILITIES AND SHAREHOLDERS’ EQUITY:

Current Liabilities:

Short-term debt

$

25

$

22

$

313

Merchandise accounts payable

2,045

1,590

2,028

Accounts payable and accrued liabilities

2,695

3,271

3,042

Income taxes

312

296

355

Total Current Liabilities

5,077

5,179

5,738

Long-Term Debt

5,857

5,861

6,412

Deferred Income Taxes

1,169

1,148

1,522

Other Liabilities

1,664

1,662

1,846

Shareholders' Equity:

Macy's, Inc.

5,821

5,745

4,362

Noncontrolling interest

(20

)

(12

)

(2

)

Total Shareholders' Equity

5,801

5,733

4,360

Total Liabilities and Shareholders’ Equity

$

19,568

$

19,583

$

19,878

Note: The prior year's amounts reflect the retrospective adoption of ASU
2014-09 on February 4, 2018.

MACY’S, INC.

Consolidated Statements of Cash Flows
(Unaudited)

(millions)

13 weeks

13 weeks

ended

ended

May 5,

April 29,

2018

2017

Cash flows from operating activities:

Net income

$

131

$

77

Adjustments to reconcile net income to net cash provided by
operating activities:

Impairment and other costs

19

—

Depreciation and amortization

235

243

Stock-based compensation expense

17

13

Gains on sale of real estate

(24

)

(68

)

Changes in assets and liabilities:

Decrease in receivables

105

170

Increase in merchandise inventories

(115

)

(227

)

Increase in prepaid expenses and other current assets

(20

)

(16

)

Increase in merchandise accounts payable

415

573

Decrease in accounts payable, accrued liabilities and

other items not separately identified

(444

)

(545

)

Increase in current income taxes

25

3

Increase in deferred income taxes

19

41

Change in other assets and liabilities not separately identified

(41

)

(27

)

Net cash provided by operating activities

322

237

Cash flows from investing activities:

Purchase of property and equipment

(132

)

(117

)

Capitalized software

(58

)

(60

)

Disposition of property and equipment

23

96

Other, net

11

21

Net cash used by investing activities

(156

)

(60

)

Cash flows from financing activities:

Debt repaid

(3

)

(152

)

Dividends paid

(116

)

(115

)

Decrease in outstanding checks

(10

)

(10

)

Acquisition of treasury stock

—

(1

)

Issuance of common stock

28

2

Proceeds from noncontrolling interest

2

3

Net cash used by financing activities

(99

)

(273

)

Net increase (decrease) in cash, cash equivalents and restricted cash

67

(96

)

Cash, cash equivalents and restricted cash beginning of period

1,513

1,334

Cash, cash equivalents and restricted cash end of period

$

1,580

$

1,238

Note: The prior period's amounts reflect the retrospective adoption of
ASU 2014-09, ASU 2016-18 (ASU 2016-18), Restricted Cash, and ASU
2016-15, Classification of Certain Cash Receipts and Cash Payments,
on February 4, 2018. As a result of the adoption of ASU 2016-18,
restricted cash of $49 million and $37 million have been included with
cash and cash equivalents above for the first quarters of 2018 and 2017,
respectively. Further, certain reclassifications were made to the prior
period's amounts to conform with the classifications of such amounts in
the most recent period.

MACY’S, INC.

Important Information Regarding Non-GAAP Financial
Measures

The company reports its financial results in accordance with U.S.
generally accepted accounting principles ("GAAP"). However, management
believes that certain non-GAAP financial measures provide users of the
company's financial information with additional useful information in
evaluating operating performance. Management believes that providing
supplemental changes in comparable sales on an owned plus licensed
basis, which includes adjusting for growth in comparable sales of
departments licensed to third parties and certain promotional events,
assists in evaluating the company's ability to generate sales growth,
whether through owned businesses or departments licensed to third
parties, and in evaluating the impact of changes in the manner in which
certain departments are operated. In addition, management believes that
excluding certain items from operating income, net income and diluted
earnings per share attributable to Macy's, Inc. shareholders that are
not associated with the company’s core operations and that may vary
substantially in frequency and magnitude period-to-period provides
useful supplemental measures that assist in evaluating the company's
ability to generate earnings and to more readily compare these metrics
between past and future periods.

The reconciliation of the forward-looking non-GAAP financial measure of
changes in comparable sales on an owned plus licensed basis to GAAP
comparable sales (i.e., on an owned basis) is in the same manner as
illustrated below, except that the impact of growth in comparable sales
of departments licensed to third parties is the only reconciling item.
In addition, the company does not provide the most directly comparable
forward-looking GAAP measure of net income and diluted earnings per
share attributable to Macy’s, Inc. shareholders excluding certain items
because the timing and amount of excluded items are unreasonably
difficult to fully and accurately estimate.

Non-GAAP financial measures should be viewed as supplementing, and not
as an alternative or substitute for, the company's financial results
prepared in accordance with GAAP. Certain of the items that may be
excluded or included in non-GAAP financial measures may be significant
items that could impact the company's financial position, results of
operations or cash flows and should therefore be considered in assessing
the company's actual and future financial condition and performance.
Additionally, the amounts received by the company on account of sales of
departments licensed to third parties are limited to commissions
received on such sales. The methods used by the company to calculate its
non-GAAP financial measures may differ significantly from methods used
by other companies to compute similar measures. As a result, any
non-GAAP financial measures presented herein may not be comparable to
similar measures provided by other companies.

MACY’S, INC.

Important Information Regarding Non-GAAP
Financial Measures

(All amounts in millions except percentages and per share figures)

Change in Comparable Sales

13 Weeks

Ended May 5,

2018

Increase in comparable sales on an owned basis (Note 1)

3.9

%

Impact of growth in comparable sales of departments licensed to
third parties (Note 2)

0.3

%

Increase in comparable sales on an owned plus licensed basis

4.2

%

Impact of quarterly timing shift associated with the Spring 2018
Friends and Family promotional event

(2.5

)%

Adjusted increase in comparable sales on an owned plus licensed basis

1.7

%

Notes:

(1)

Represents the period-to-period percentage change in net sales from
stores in operation throughout the year presented and the
immediately preceding year and all online sales, excluding
commissions from departments licensed to third parties. Stores
impacted by a natural disaster or undergoing significant expansion
or shrinkage remain in the comparable sales calculation unless the
store is closed for a significant period of time. Definitions and
calculations of comparable sales differ among companies in the
retail industry.

(2)

Represents the impact of including the sales of departments licensed
to third parties occurring in stores in operation throughout the
year presented and the immediately preceding year and all online
sales in the calculation of comparable sales. The company licenses
third parties to operate certain departments in its stores and
online and receives commissions from these third parties based on a
percentage of their net sales. In its financial statements prepared
in conformity with GAAP, the company includes these commissions
(rather than sales of the departments licensed to third parties) in
its net sales. The company does not, however, include any amounts in
respect of licensed department sales (or any commissions earned on
such sales) in its comparable sales in accordance with GAAP (i.e.,
on an owned basis). The amounts of commissions earned on sales of
departments licensed to third parties are not material to its net
sales for the periods presented.

The following is a reconciliation of the non-GAAP financial measures of
net income and diluted earnings per share attributable to Macy’s, Inc.
shareholders, excluding certain items identified below, to GAAP net
income and diluted earnings per share attributable to Macy’s, Inc.,
shareholders, which the company believes to be the most directly
comparable GAAP measures.

13 Weeks

13 Weeks

Ended

Ended

May 5,

April 29,

2018

2017

Net income attributable to Macy’s, Inc. shareholders

$

139

$

78

Add back the pre-tax impact of impairment and other costs (Note)

13

—

Add back the pre-tax impact of premiums on the early retirement of
debt

This section contains press releases issued by Macy’s, Inc. on the date specified. We have not undertaken any responsibility to update the information in these releases and in some instances the information in these releases may be dated.